Just in time for the busy grantmaking season, we’re pleased to share our 2022 Report on Private Philanthropy—our most comprehensive inside look at how foundations are giving and investing. Our subject matter experts spent months tracking and analyzing the activities of a sample of nearly 1,000 private, non-operating foundation clients over the past two calendar years.
Buoyed by strong markets, philanthropists accelerated their giving in 2021, and gradually expanded their focus beyond the urgent needs that emerged in 2020. At the same time, foundations deployed their capital in fewer individual grants, underscoring a desire to achieve more targeted impact. We hope this report informs your philanthropic decisions during this important time of the year and serves as a helpful primer to a successful 2023.
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The stark needs of 2020 have seemingly propelled the philanthropic sector into an era in which philanthropists feel a greater sense of responsibility to address visible and acute need.
After the well-documented generosity in 2020, private foundations increased their giving again in 2021, with the foundations in our study collectively granting $689 million, or $40 million more than in 2020.
As we’ve observed in prior years, foundations of all sizes granted more than their annual mandatory distribution requirement of 5% in 2021, with smaller foundations giving nearly twice that (8.9%).
Private foundation endowments experienced double-digit growth in both 2020 and 2021, which is consistent with strong market performance and contribution rates, helping to set the stage for future giving. In 2021, endowments increased $1.7 billion year-over-year.
A Return to Core Missions
Much of our data suggests a post-pandemic easing that allowed private foundations to return to their core missions and established grantmaking processes in 2021 after answering the call for emergency assistance in 2020.
While foundations gave more dollars year-over-year in 2021, they made 500 fewer grants (30,470) than in 2020, suggesting a move from urgently helping as many recipients as possible to making a more concentrated impact.
Grants to individuals, which foundations used extensively during the crises in 2020 to directly send emergency aid to people in need, decreased by 64% in 2021.
Foundations decreased their use of general-purpose grants in 2021 by 3% after issuing an unprecedented number of them in 2020 to give recipients the latitude to direct funds where they were needed most.
Grants supporting human services and public/societal benefit organizations decreased in 2021 (after spiking in 2020) while those supporting education, the arts and the environment increased, indicating that many foundations are gradually refocusing on their pre-pandemic missions.
Outside of traditional year-end giving, the highest volume of 2021 grant activity occurred in June as it has in most years, aside from 2020 when it occurred earlier in the year in response to the national emergency proclamation regarding COVID-19.
Distinct Differences By Size
Foundations exhibit distinct differences around giving and growth based on their size.
Year-over-year, larger foundations (those with assets between $50-500 million) increased their giving by nearly 21% in 2021. Mid-size foundations ($10-50 million in assets) and smaller foundations ($1-10 million in assets) decreased their giving by approximately 7% and 2% respectively.
Contributions of new assets into foundations happened at a higher rate (9.9%) among the smaller segment, as compared to their mid-size and larger counterparts (5.1% and 5.7% respectively). And while all foundations enjoyed growth in 2021, smaller foundations realized the greatest gain in assets, adding 15.6% in net value.
In their investment portfolios, smaller foundations had the largest allocation to equities and cash holdings, and the lowest allocations to alternative assets, in both 2020 and 2021. Larger foundations were the opposite; they devoted more than 20% of their portfolios to alternatives in both years—nearly five times the exposure maintained by smaller foundations.
Questions About This Report Or Want to Learn More?
Whether you’re looking for support for your existing foundation or want to create a private foundation, our philanthropic specialists are here to help. To learn more, schedule a call with us here or reach us at 800-839-0054. Together, let’s #begiving.